This is despite an alarmingly steep fall in iron ore prices to as low as $US86 a tonne in September last year, which contributed to a 40 per cent fall in Fortescue’s reported profit, which was down from $US801 million, despite record levels of production. Revenue was $US3.30 billion, compared with $US3.35 billion in the previous corresponding period.

The sharp fall in commodity prices last year pushed the debt-laden Fortescue to the brink, and its shares fell to as low $2.81 before recovering sharply.

Shares in Fortescue were down as much as 22 cents, or 4 per cent, to $4.96 this afternoon.

Iron ore prices, which have been at the whim of the buying and selling of China's largely state-owned network of steel mills, have rebounded strongly in recent months, buoyed by increased confidence in the steel sector after a relatively smooth leadership transition in Beijing.

The benchmark iron ore price last traded at $US158.

‘‘It has recovered more strongly than we had anticipated,’’ Mr Power said. ‘‘There is a very signficant increased confidence in China to continue its urbanisation and infrastructure build and that’s restarted a lot of construction activity in China.’’

Mr Power said he expected iron ore prices to settle at around $US120 or $US130 a tonne in the next year or so, providing a comfortable profit margin as the miner expands production to 155 million tonnes per year by the end of the year.

But the scare last year has prompted Fortescue to pay off the debt on its balance sheet faster than originally planned. This includes a part-sale of its Pilbara Infrastructure (TPI) assets, which could fetch up to $3 billion, by the end of the financial year.

‘‘It allows us to accelerate the de-gearing process,’’ Mr Power said, adding that the sale process was progressing well.

Fortescue did not declare an interim dividend, emphasising its focus on capital expenditure and paying back debt. It said it was looking to move to establishing a set payout ratio policy for its dividend payments in future.